13 August 2009

Mike Eilertsen: Go with your gut

Mike Eilertsen, LIVEOUTLOUD & Sir Richard Branson, Virgin

Mike Eilertsen is CEO of LIVEOUTLOUD, Southern Africa’s largest all-encompassing luxury lifestyle brand. He’s been moving and shaking in the entrepreneurial space since he was at school, showing that tenacity and innovative business goals get you what you want. He’s a finalist for the Sanlam Entrepreneur of the Year 2012 award and, since 2007, has managed to turn a R300 investment of waitering tips into a competitive, successful and sustainable business empire.

Have you always been entrepreneurial or is it something that’s grown over time?

It has always been something that I knew I wanted; I started my first business before I even knew what a business actually was. In grade five, my weekly R10 lunch money went to paying the two bestmarble players a couple years ahead of me R5 each for all their marble winnings of the day. I then divided the marbles into starter packs and sold them for R10 to the mothers in the parking lot after school. Business was shut down when my parents called the school after I asked them to take me shopping to spend my R930 profit.

What were you doing before starting your business?

I was a waiter for all of three months and, after the owner of the prominent Sandton meat restaurant where I was working refused to serve a patron’s wife a vegetarian meal, I decided I wouldn’t work for anybody again. A week later the Breakfast Boy was launched. I took the R300 I’d earned in tips and ploughed it into a business where I hoped to be selling breakfasts and coffees across all major intersections, stadiums and large gatherings across Africa. That was just the beginning and it's developed and grown since then. LIVEOUTLOUD – The Collection started in November 2007.

What kind of planning went into starting the venture? Is a business plan really necessary?

Not at all. All you need is a good idea, a great way to differentiate yourself and the courage to see it through. I believe people spend too much time planning and not enough time doing.

How does a new entrepreneur find business leads and profit from them?

All an entrepreneur has to focus on is differentiating the product and service, while creating a goodrapport with the consumer. Combine this and then stand in front of people face-to-face so they can see what you’re about, and feel your enthusiasm, and the money will follow.

How does a new entrepreneur figure out what makes them unique and leverage that difference?

They must look at what their industry is doing and go out of their way to change the rules of engagement. The industry we are in doesn’t feel we play by the rules and that our product is unconventional, but that’s a good thing. The difference is that we are turning away business in print media, something unheard of in an era where magazines are shutting down constantly.

How does a new entrepreneur figure out what to charge for their service/product?

He/she must charge the amount people are willing to pay. Without telling family and friends about the product (without saying it’s yours), ask them to pay for it. If they’re reaching for their wallet, your price is not too high. Ultimately you gauge the price on whether or not you are selling.

What was your most epic fail in the early days?

A lack of financial control. I loved the sales side of the business and never paid attention to what the accountants were doing. No matter how much we sold, we just didn’t make enough. I only solved this recently by employing an experienced full-time accountant who pulls me over the coals every now and then when I don’t follow procedure!

What are the two biggest/most common mistakes that new entrepreneurs make?

Spending money they haven’t made, and not employing a great accountant.

How do you keep yourself motivated to continue?

You need a fellow businessowner who you can call on those lonely days to offload. They don’t need to give advice, but just remind you about why you started, and that we’ve all been there. This isn’t amentorship role – I recommend that for the first year of establishing your business you shouldn’t have a mentor. They have a tendency to guide you, but also tell you what can’t be done. Entrepreneurs have to go on gut-feel for the first year, defy the odds, and do that which would make most mentors cringe.

Which three character traits do all entrepreneurs possess?

Courage, drive and they’re all dreamers.

Do you believe in internships for your business?

Yes, we have an obligation as leaders to foster youth leadership, and show South Africans how easy business can be. We have a policy at LIVEOUTLOUD to accept interns whenever possible.

If you could give yourself any advice back then, what are your top 5 wisdoms?

*Overemploying: Dreams of having an empire and hiring hundreds of employees fill our heads from the day we first think of opening a business. As a result, each penny made is reinvested into staff, growing the company and doing what is believed to better the company as a whole. I had 47 employees when the market changed and the recession took hold, and overnight turnover dropped. An organisation’s employees are its biggest asset, but they are an even bigger liability when things get tight. High overheads are what kill a business, and even if you survive, your morale and productivity is affected by retrenching.

Lesson: rather employ fewer, but more skilled individuals. This will make your business strong and lean.

*Effective financial control: Having ineffective financial control is like driving a car with a blindfold on. Yes, you might move forward for a while, but sooner or later you’re going to crash. Initially I hired friends with accounting degrees or bookkeepers. They weren't well-informed on tax structures and effective financial control. This resulted in money being put into projects that were doomed to fail.

Lesson: Employ a highly-skilled, well-established financial controller. No matter how expensive they may seem, they will give your business security and direction. After yourself, your accountant should be the next hired.

*Celebrating a deal prior to the paperwork being signed: “A verbal deal isn’t worth the paper it is written on.” These words echo in my head as disappointments follow you throughout your career. We all know the story – the meeting that finally results in your client saying YES; you allocate resources, time and a celebration to the new project only to find out your client didn’t have the jurisdiction or funds have run dry. Despite being an exceptionally optimistic person, life has taught me to celebrate only the signed deals!

Lesson: Push for the signature or purchase order. Don’t settle for an email confirmation or the classic “please go ahead” as these are the pitfalls we in sales fall for over and over again. Have the contract ready so when the client says yes, they sign something straight away to get you going.

*Being too involved: Start-ups require you to be involved in all aspects of your business, but as your company grows you find yourself still doing the things your employees should be doing. By being too involved on every level, you’re no longer leading and you won’t have the time for vision, strategy and the bigger picture.

Lesson: Employ people who are leaders in their own right. This will allow you to rest assured knowing they are doing what’s required.

*Employing your clones: You don’t realise you’ve done it until someone points it out. As human beings, we’re comfortable around those who are similar to us. Gregarious people enjoy the company of other enthusiastic individuals. Accountants like others with logical and analytical personalities. No matter who you are, you tend to be impressed when hiring those whose traits you relate to. In my case I’m a hunter sales personality with weak administrative skills. Three months after opening we had a team of six others exactly like me, and not a contract, procedure or file in sight. Once the “clones” were pointed out, I diversified completely, targeting those who were as different from me as possible.

Lesson: Choose your non-negotiable requirements. For me these were loyalty and big dreamers, and I only employ people who share these traits, but they have every other skill I don’t. This will ensure a strong, adaptable business team.